The city says that theatres are undercharged for the developmental rights sales fee and are seeking a significantly higher rate.

Bruce Glikas/FilmMagic

The Department of City Planning has set forth a new proposal to increase the amount Broadway theatre owners must pay into the Theater Subdistrict Fund when they sell developmental or “air rights” to their historic buildings.

According to Politico, the proposal would increase the current contribution from $17.60 per square foot to 20 percent of the sale price, or 20 percent of $347 per square foot (whichever is higher). The $347 baseline would be adjusted every three to five years according to the new plan.

As development booms throughout midtown, the city says that the fee should be corrected to reflect “the actual value of the development rights, rather than assessed property values, which are not based on actual fair market value or sales price.”

A group of real estate and theatre executives testified against the proposal last week. Robin Kramer, a lawyer representing Broadway theatre owners, argued that the “floor cost” was unfair, adding “most shows do not even repay their costs ... Theatres must continue to be maintained and pay taxes even when shows fail and theaters are empty.”

The Theater Subdistrict Fund was established in 1998 “as part of a larger effort to help protect and preserve theaters in Midtown Manhattan and create a framework for development in the area. It is intended to promote the production of new theater work, develop new audiences, and showcase the importance of Broadway and its contribution to American Theater.”